10-Q 1 form10q-38512.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter and Six Months Ended March 31, 2001 Commission File Number 1-8893 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP -------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 59-2501059 ---------------------------------- --------------------- (State of other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 2501 S. Ocean Drive Hollywood, Florida 33019 ------------------------------- ----------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (954) 927-3080 ------------------ NONE Former name, former address and former fiscal year, if changed since last report Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. CLASS Outstanding at March 31, 2001 ------------------------------- ------------------------------------ Limited Partnership Units 4,485,504 units INDEX Page Number PART I. Financial Information Balance sheets - March 31, 2001 and September 30, 2000 2 Statements of operations - Three months and six months ended March 31, 2001 and 2000 3 Statements of cash flows - Three months and six months ended March 31, 2001 and 2000 4-5 Notes to financial statements 6 Management's discussion and analysis of financial condition and results of operations 7-8 Part II. Other information and signatures 9 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP BALANCE SHEETS March 31, September 30, 2001 2000 ----------- ----------- (unaudited) ASSETS Cash $ 1,418,528 $ 812,520 Other receivables 2,103 549,482 Property held for sale 1,080,358 1,366,915 Other assets 28,536 55,994 ----------- ----------- $ 2,529,525 $ 2,784,911 =========== =========== LIABILITIES AND PARTNERS' EQUITY Liabilities: Accounts payable and other liabilities $ 162,285 $ 215,551 ----------- ------------ Partners' equity: 4,485,504 units authorized and outstanding 2,367,240 2,569,360 ----------- ------------ $ 2,529,525 $ 2,784,911 =========== ============ 2 See notes to financial statements ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)

3 See notes to financial statements ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)

4 See notes to financial statements ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)

See notes to financial statements 5 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED MARCH 31, 2001 AND 2000 1. Interim financial statements: The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2001. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2000. 2. Income Tax. The Partnership has elected to continue its Partnership status beyond December 31, 1997, by agreeing to pay an annual 3.5% Federal tax on its gross income for Federal income tax purposes (principally revenue less cost of land sold). For the six months ended March 31, 2001 and 2000, gross income for Federal tax payments is not material and accordingly, no provision for Federal taxes has been provided. The partners are required to include in their income tax returns their share of the Partnership's taxable income or loss. 6 ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THREE AND SIX MONTHS ENDED March 31, 2001 AND March 31, 2000 (UNAUDITED) Results of Operations NOTE: Since the Partnership's activities consist principally of the sale of its remaining properties, and the timing of closing dates for such sales is usually subject to contingencies which often result in changes to such closing dates, a comparison of sales and income results from comparable periods in different years is not considered meaningful. During the six month periods ended March 31, 2001 and 2000, the Partnership had net land revenues totaling $330,000 and $1,316,250 respectively, and a net loss of ($202,120) or ($0.05) per unit and a net loss of ($88,489) or ($0.02) per unit, respectively. During the quarter ended March 31, 2001 the partnership's revenues were principally derived from the sale of a tract of approximately 4.54 acres in the Village of Royal Palm Beach zoned for multi-family residential units. During the corresponding quarter of 2000, the partnership's revenues derived from its sale of 45 residential lots in the Crestwood single family tract for gross proceeds of $1,316,250. Selling, Administrative and Other Expenses Selling, general and administrative expenses were $244,382 in the six months ended March 31, 2001, compared with $306,504 in the corresponding quarter of 2000, the reduction resulting principally from lower commission expenses due to lower land sales during the period. Liquidity and Capital Resources Cash increased from $812,520 at September 30, 2000 to $1,418,528 at March 31, 2001, resulting principally from the Partnership's collection during the period of a receivable under the Utility Contract referred to under "Affect of Land Sales on Future Cash Flow," and from the sale of land referred to above. The Partnership's cash balances at any particular point depend primarily on the timing of sales of its real estate, which timing can be affected by numerous factors. During the current fiscal year, and based upon management's judgment that ordinary operating expenses will not increase, the Partnership anticipates that cash flow and liquidity requirements will be satisfied by cash on hand. Future sales of land are subject to conditions which might not be satisfied, although the Partnership has no present knowledge of circumstances which would render likely the non-satisfaction of such conditions. Cost of Sales Cost of sales relates to the sales of land as discussed above. This item varies as a result of dissimilar profit margins and income recognition methods on the various sales of land. The cost of sales of $293,477 and $1,075,801 during the three months ended March 31, 2001 and 2000, respectively, reflect the sales made in those quarters as reflected under "Results of Operations." Affect of Land Sales on Future Cash Flow The Partnership's future revenues will depend solely upon its ability to develop and/or sell its remaining real estate, and upon receipts from a prior sale of a utility plant. As of March 31, 2001, the Partnership retained and was holding for sale: (1) a 50% interest in 3.2 acres of commercial property in the "Crestwood" tract in the Village of Royal Palm Beach under option for sale for a price which would generate gross proceeds to the Partnership of approximately $400,000; (2) 162 lots in the vicinity of the Village of Royal Palm Beach zoned for residential use but presently the subject of litigation as to the availability of building permits; and (3) a tract of approximately 20 acres in the Crestwood multi-family tract in the Village of Royal Palm Beach. The Partnership has held discussions with the County of Palm Beach with respect to the sale of the aforesaid 162 lots to the County at prices in excess of the carrying value thereof on the Partnership's books, but to date the Partnership had declined to sell the lots, believing that the lots would have a substantially higher value if building permits could be acquired therefor; however, the County has refused to issue building permits. The Partnership instituted litigation in the Florida District Court for Palm Beach County to compel the issuance of such permits; recently, however, a decision adverse to the Partnership was rendered. The Partnership is considering additional legal proceedings, including an appeal of the court's decision. In 1983 the Partnership's Predecessor Company sold to the Village of Royal Palm Beach a water and sewage treatment system servicing the Village. Pursuant to the agreement of sale ("Utility Contract"), the Partnership was entitled to receive annual payments through 2003 based on water consumption in the Village. Through December 29, 2000 the Partnership had received total payments of $6,639,000 in "consumption" payments and $331,935 in Guaranteed payments under the Utility Contract, and received approximately $548,000 in January, 2001 in respect of the year 2000. The Utility Contract will expire in 2003. Since the highest annual payment in the previous ten years was $427,000, it is considered extremely unlikely that the rate of new construction or water consumption in such area will be sufficient to enable the Partnership to receive the maximum remaining $4,261,000 in contingent payments under the Utility Contract prior to the expiration of the contingent payment term. The partnership has declared aggregate distributions of $32, 519, 094 ($7.25) per unit since inception through March 31, 2001. No distributions have been made since March 3, 2000. Total net cash flow which might become available for additional distributions is unpredictable due to uncertain conditions in the South Florida real estate market in which the Partnership's remaining real estate is located, and competition from other owners and developers of real estate in the South Florida market. These conditions will continue to affect the realizable value of the Partnership's remaining land, including decisions by parties holding options on the Partnership's land to exercise such options in whole or in part. Environmental Matters There are no environmental contingencies in respect of the Partnership or its properties. Use of all of the Partnership's properties is subject to compliance with state and county land use regulations relating to environmental matters, which the Partnership takes into account in considering the values of its properties. Income Taxes See Note 2 to the Financial statements. PART II - OTHER INFORMATION (a) Exhibits - None (b) Reports on Form 8-K - None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ROYAL PALM BEACH COLONY, LIMITED PARTNERSHIP By: Stein Management Company, Inc. Managing General Partner By: /s/ Irving Cowan ------------------------------ Irving Cowan, President DATE: June 14, 2001

ROYAL PALM BEACH COLONY LTD PARTNERSHIP 10-Q